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In a high-inflation environment your profits are constantly shrinking. The problem also affects small and independent makers of all kinds. If you are an indie

by kepano 3y ago

In a high-inflation environment your profits are constantly shrinking. The problem also affects small and independent makers of all kinds. If you are an indie maker and priced your product at $10 in 2020, you're now effectively making $8.38 USD[1]. Assuming inflation will remain elevated and you want to maintain the same margins, you need to either: 1. increase prices 2. reduce quality/quantity/features 3. reduce supplier costs 4. reduce service costs Customers are very sensitive to increases in prices. This is a case where none of the options are great. [1]: https://twitter.com/kepano/status/1702401372661096477 https://twitter.com/kepano/status/1702401372661096477

ImPostingOnHN 3y ago
this is an accurate description of shrinkflation, though not a good justification of it if companies were honest, they'd put"29% less, but the same price! Inflation, you know?", and more-informed consumers could make more-informed choices indeed, "Customers are very sensitive to increases in prices" is a nicer way of saying "shrinkflation makes it easier to hide from consumers that they are receiving less value for their money" Thank you for this site, if the author is here, it's something I felt we needed to make markets more informed and more efficient. I'll be submitting content.
- adamc 3y ago
  Being honest doesn't pay as well. If it did, they would just raise the price. They are hoping you don't notice.
- kepano 3y ago
  I'm not defending CPG companies. I'm pointing out that if you're an indie maker inflation is a problem you need to contend with in your own pricing. Once you start thinking about it from that perspective, you realize how difficult of a problem it is to solve in a way that feels fair to customers. In theory software is easier because you could more easily change your pricing every month. With CPG these products sit on store shelves and the manufacturers have less direct control over the pricing.
  - ImPostingOnHN 3y ago
    The issue most people have with shrinkflation isn't that the manufacturers made a tough call when all the options were tough, it's that manufacturers do so in a manner deliberately calculated to hide information from the consumer, and in some cases outright deceive them (if they didn't, this shrinkflation tracker wouldn't exist) To reiterate, a company honest with consumers would inform them they were getting less for the same price, and try to make the case you're making now: "hey, sorry about this, but times are tough, and we can't raise prices" Less scrupulous and deceptive companies don't
    - kepano 3y ago
      Not sure if this fits under shrinkflation, but the practice of substituting quality ingredients for cheaper ones is even worse IMO. When Nutella did it, it caused a huge kerfuffle, but it's virtually impossible for a consumer to track this across all the products they buy. An upstream problem is the money printing that causes some of these incentives in the first place.
    - robertlagrant 3y ago
      > To reiterate, a company honest with consumers would inform them they were getting less for the same price, and try to make the case you're making now: "hey, sorry about this, but times are tough, and we can't raise prices" How do they do this? They make a chocolate bar that a shop buys and puts on a shelf.
      - ImPostingOnHN 3y ago
        They have to alter the packaging to account for the changes. They can either do so in a way that makes apparent to the customers that they're receiving less value for their money, making sure they're aware of it, or they can do so in a way that attempts to deceive consumers and hide this information. An example of messaging for the former is described in the quote you quoted. Another would be to use different-looking packaging, to indicate that it is not what it was before. If a consumer will still buy the item when properly informed of the lower value, then this apparent labeling should not have any effect on sales. If it does, it means the information hiding was material, which makes it bad. tl;dr: companies hide this information because being deceptive increases sales, if it didn't, they wouldn't
imglorp 3y ago
There's more malfeasance here. 5. They expansively tier their product line with minor variation to remove the idea of a standard offering. Eg there are some 33 sizes of M&Ms so nobody could say "get me a bag of M&Ms" any more. Forget comparing cell service plans. * https://www.measuringhow.com/m-and-m-bag-sizes-guide/ 6. They generate different model names for sale at different retailers to obstruct comparison shopping. The TV, appliance, and mattress industries are dirty here. * https://www.quora.com/Why-are-model-numbers-for-the-same-appliance-all-different-in-each-store-you-visit?share=1 7. They attempt to detect when comparison shopping is happening and intervene. * https://www.washingtonpost.com/news/innovations/wp/2017/06/16/amazon-has-a-patent-to-keep-you-from-comparison-shopping-while-youre-in-its-stores/ * https://www.patriotsoftware.com/blog/accounting/discouraging-price-shopping/
- masfuerte 3y ago
  Shoe and boot manufacturers also do 6.
- consp 3y ago
  And onther method is offering a new product in the same category with less content for a higher price, eventually switch over all products and level the price, now you have less at the same or higher prices for all products (looking at you teisseire as a latest example)
dweinus 3y ago
That's a good explanation, but problems with silently reducing quantity are: - It attempts to trick the customer - As a customer, it makes it harder to depend on your product or buy predictably (a box of cereal used to last me through the week, now suddenly it doesn't) - It is now harder for me to comparison shop because I need to calculate cost per volume/weight - It is often done at a rate higher than inflation This site is great, people need more transparency and companies need to be called out
n8cpdx 3y ago
Most of the products on the site appear to be candy/junk that shouldn’t be consumed in large quantities anyway. There is probably substantial social good being done by making the default portions of pringles and chocolate smaller.
- djmips 3y ago
  What if people just buy more and now there is more package waste?

by kepano 3y ago

ImPostingOnHN 3y ago

this is an accurate description of shrinkflation, though not a good justification of it if companies were honest, they'd put"29% less, but the same price! Inflation, you know?", and more-informed consumers could make more-informed choices indeed, "Customers are very sensitive to increases in prices" is a nicer way of saying "shrinkflation makes it easier to hide from consumers that they are receiving less value for their money" Thank you for this site, if the author is here, it's something I felt we needed to make markets more informed and more efficient. I'll be submitting content.

adamc 3y ago
Being honest doesn't pay as well. If it did, they would just raise the price. They are hoping you don't notice.
kepano 3y ago
I'm not defending CPG companies. I'm pointing out that if you're an indie maker inflation is a problem you need to contend with in your own pricing. Once you start thinking about it from that perspective, you realize how difficult of a problem it is to solve in a way that feels fair to customers. In theory software is easier because you could more easily change your pricing every month. With CPG these products sit on store shelves and the manufacturers have less direct control over the pricing.
- ImPostingOnHN 3y ago
  The issue most people have with shrinkflation isn't that the manufacturers made a tough call when all the options were tough, it's that manufacturers do so in a manner deliberately calculated to hide information from the consumer, and in some cases outright deceive them (if they didn't, this shrinkflation tracker wouldn't exist) To reiterate, a company honest with consumers would inform them they were getting less for the same price, and try to make the case you're making now: "hey, sorry about this, but times are tough, and we can't raise prices" Less scrupulous and deceptive companies don't
  - kepano 3y ago
    Not sure if this fits under shrinkflation, but the practice of substituting quality ingredients for cheaper ones is even worse IMO. When Nutella did it, it caused a huge kerfuffle, but it's virtually impossible for a consumer to track this across all the products they buy. An upstream problem is the money printing that causes some of these incentives in the first place.
  - robertlagrant 3y ago
    > To reiterate, a company honest with consumers would inform them they were getting less for the same price, and try to make the case you're making now: "hey, sorry about this, but times are tough, and we can't raise prices" How do they do this? They make a chocolate bar that a shop buys and puts on a shelf.
    - ImPostingOnHN 3y ago
      They have to alter the packaging to account for the changes. They can either do so in a way that makes apparent to the customers that they're receiving less value for their money, making sure they're aware of it, or they can do so in a way that attempts to deceive consumers and hide this information. An example of messaging for the former is described in the quote you quoted. Another would be to use different-looking packaging, to indicate that it is not what it was before. If a consumer will still buy the item when properly informed of the lower value, then this apparent labeling should not have any effect on sales. If it does, it means the information hiding was material, which makes it bad. tl;dr: companies hide this information because being deceptive increases sales, if it didn't, they wouldn't

imglorp 3y ago

There's more malfeasance here. 5. They expansively tier their product line with minor variation to remove the idea of a standard offering. Eg there are some 33 sizes of M&Ms so nobody could say "get me a bag of M&Ms" any more. Forget comparing cell service plans. * https://www.measuringhow.com/m-and-m-bag-sizes-guide/ 6. They generate different model names for sale at different retailers to obstruct comparison shopping. The TV, appliance, and mattress industries are dirty here. * https://www.quora.com/Why-are-model-numbers-for-the-same-appliance-all-different-in-each-store-you-visit?share=1 7. They attempt to detect when comparison shopping is happening and intervene. * https://www.washingtonpost.com/news/innovations/wp/2017/06/16/amazon-has-a-patent-to-keep-you-from-comparison-shopping-while-youre-in-its-stores/ * https://www.patriotsoftware.com/blog/accounting/discouraging-price-shopping/

masfuerte 3y ago
Shoe and boot manufacturers also do 6.
consp 3y ago
And onther method is offering a new product in the same category with less content for a higher price, eventually switch over all products and level the price, now you have less at the same or higher prices for all products (looking at you teisseire as a latest example)

dweinus 3y ago

That's a good explanation, but problems with silently reducing quantity are: - It attempts to trick the customer - As a customer, it makes it harder to depend on your product or buy predictably (a box of cereal used to last me through the week, now suddenly it doesn't) - It is now harder for me to comparison shop because I need to calculate cost per volume/weight - It is often done at a rate higher than inflation This site is great, people need more transparency and companies need to be called out

n8cpdx 3y ago

Most of the products on the site appear to be candy/junk that shouldn’t be consumed in large quantities anyway. There is probably substantial social good being done by making the default portions of pringles and chocolate smaller.

djmips 3y ago
What if people just buy more and now there is more package waste?